Alec Shelbrooke’s draft bill was designed to ensure that anyone working as an intern would be paid the minimum wage.
Photograph: John Stillwell/PA

The government has blocked an attempt to have unpaid internships banned, but is to investigate the practice as part of the current review of modern working practices.

Draft legislation put forward by Conservative MP Alec Shelbrooke was designed to ensure that anyone working as an intern would be paid the minimum wage, which depends on the age of the worker.

Speaking in parliament he described internships as “the acceptable face of unpaid labour in modern Britain today”. He added, they “should have no place in a meritocratic country that aims to work for the many and not the privileged few”.

He added that his bill was designed to end “a new rise in the class society that means only those from a wealthy background can gain a privileged leg-up”.

Speaking about Shelbrooke’s bill, James told MPs: “While it’s extremely well-intentioned, I do have concerns that it could have unintended consequences that might even undermine existing employment laws and protections,” she told MPs. She added that if interns met the legal definition of workers in employment law, they were already entitled to the minimum wage.

The campaign group Intern Aware said two-thirds of businesses backed a four-week limit on unpaid placements, and just 12% opposed such a cap.

Ben Lyons, Intern Aware co-director, said: “It is positive that the review is going to be looking at this as it is a major issue, which is reducing social mobility and pricing young people out of professions. However, it is disappointing that the government talked out the bill.”

Lyons said Shelbrooke’s bill had been “a real opportunity” for the government to back up Theresa May’s pledges to make progress on social mobility. He added: “There’s a sizeable minority of internships which are unpaid – we are surprised that more action hasn’t been taken.”

Internships are controversial because they are perceived as biased towards the children of well-off professional parents who live in London. They are able to tap into their parents’ contacts to get valuable work experience and can also afford to take unpaid roles.

In her speech to the Tory party conference last month, the prime minister said she intended to tackle unfairness and ensure “ordinary working-class people” had “access to the opportunities that are too often the preserve of the privileged few”.

Shelbrooke highlighted how some MPs were using unpaid placements. “A quick scan of the [w4mp] website shows roughly 22 MPs advertising for unpaid interns outside of the politics and parliamentary study scheme,” he said. “It sends a message to businesses across the United Kingdom that exploiting … young workers is acceptable.”

A government spokesperson said: “The government is committed to building an economy that works for all, not just the privileged few. It’s important that young people have access to employment and work experience regardless of their background.”